How to Invest in Real Estate without Any of Your Own Money Waterville ME

You’ve heard the adage ‘It takes money to make money’ and in some cases it does. But it is equally important to use strategies that keep your initial capital low and reinvested. Investors are always interested in investing in real estate while being able to preserve and keep the capital they have available. Ideally the best investment is one made by using cash flow or funds made available from capital you already have invested somewhere else. Here are three low risk easy ways to invest without touching your capital.

Strategy 1. Line of Credit

Use what you’ve got. A good asset puts cash in your pocket every month; a bad one takes it out. Of course there are a few exceptions, but for arguments sake let’s only focus on positive cash flow properties. If you have equity in your home you may be able to harness the power of today's incredibly low interest rates and use your LOC to invest. If you borrow money at 2%, and make 10% on it, that is a gross gain of 8%.

The general consensus is the best use of a line of credit is to purchase assets. Anything that you purchase that appreciates and gives you monthly revenue is an asset, however, purchases that depreciate and cost you money monthly are liabilities.

Many people see no problem with using a line of credit to pay credit card debt or for a vacation; however, this is the worst thing to do. You’re paying interest on a purchase that produces no income and sure you can say you have great memories of the trip, or now your card is clean, but you’ll soon put another charge on it and the vacation will be long forgotten while the debt remains.

What to do?

Purchase cash flow positive real estate and you are leveraging the value of your home to purchase an asset.

How do I do it?

1. Ensure that your bank will give you a line of credit on your property.
2. Calculate expenses of your investment real estate to make sure the property cash flows. If it doesn’t you’ve bought a liability that will take money out of your pocket monthly both from mortgage payments and your line of credit.
3. Work the numbers with many different interest rates see how far of a safety range you have and leave a good safety net in the bank for unexpected repairs.

Strategy 2: Self-Directed Retirement Funds

Over the last year a lot of us have seen our retirement funds cut in half. For many the mutual funds that they have been contributing to for years with the hope of an early or adventure filled retirement, have now decreased in value and have pushed retirement further out of reach.

You can take your RRSP or IRA out of the banks hands and recapture your dream of early retirement. Self directed RRSPs and IRAs are those where you can invest with your retirement capital into a range of investments. Investment real estate is one of them. Just make sure to follow the transaction guidelines to stay out of trouble.  

So how do you invest?

Hold a fi...

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